The Jakarta Post
As one of the world's top cigarette producers, Indonesia will request the World Trade Organization (WTO) to establish a single panel of trade and legal experts to process its challenge to Australia's law on cigarette plain packaging.
The request will be filed after the WTO's dispute settlement body gave Indonesia the nod at the end of last month to seek the organization's ruling to determine whether Australia has broken global trade rules.
Under the law on cigarette plain packaging, Australia has required cigarettes to be sold in uniform green packets with white labeling since December 2012.
Indonesia formally filed its request for a hearing pertaining to the rule under the WTO in September last year.
Trade Ministry director general for international trade cooperation Iman Pambagyo said on Wednesday that the formation of a single panel to tackle Indonesia's challenge separately from four other contenders ' Cuba, the Dominican Republic, Honduras and Ukraine ' was considered more effective.
Iman said Indonesia's annual cigarette exports to Australia were not sizeable, but such a measure could be followed by other countries, thereby possibly largely affecting sales on a wider scale.
'Plain packaging is adopted without scientific evidence or analysis and if we ignore that, this can be a precedent for any country to adopt a restrictive policy without a scientific base,' he said.
Major cigarette producers such as Central-Java based Djarum and East Java-based Gudang Garam will be among local industry players that could feel the impact of the plain packaging requirement.
Australia could have taken less trade-restrictive measures than plain packaging to discourage smoking and reduce the number of smokers in the country, Iman added.
In a recent move, the European Parliament approved anti-smoking legislation to be adopted across the European Union (EU), a means to help reduce the number of smokers by 2.4 million.
Some EU countries considered applying plain packaging by removing any branding from cigarette packs. Last week, the United Kingdom said all tobacco products sold in the country should be packaged without branding and supplemented by graphic health warnings.
Following the establishment of the panel, the WTO will oversee a hearing of the dispute, in which Indonesia alleges Australia to have breached agreements of the global trade governing body and the intellectual property rights of brands.
Iman said the application of the plain packaging rule would force the local cigarette industry to adjust, which would have a negative impact particularly on small- and medium-sized cigarette producers who might have little capacity to do so.
'The effectiveness of plain packaging is unproven. With similar packaging, cigarette producers will only compete in terms of price,' he said, adding that the rule would also stimulate the emergence of fake products and illegally-traded cigarettes.
Last year, Indonesia exported a US$666 million worth of cigarettes.
The tobacco dispute with Australia is the second case that Indonesia has faced in the past few years.
Earlier, it challenged the US over the latter's ban on clove cigarette sales and won after the WTO ruled the ban was discriminatory.
The US did not change its tobacco rule to comply with the ruling and Indonesia demanded retaliatory measures.
Retaliation, a form of trade sanction imposed by a complainant on its trade partner, is usually resorted to if a disagreement over compensation arises between the disputing parties.
Retaliation may include a tariff cut by the losing country equal to the value lost or suspension of certain tariff concessions the winning country provides to the losing country.
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